Novadx Ventures Corp. (TSX VENTURE: NDX) said May 10 that the Supreme Court of British Columbia has issued a decision in favor of the company and its subsidiary that runs coal mines in the U.S., MCoal Corp., and dismissed all of the claims of the holders of Series A and Series B Secured Convertible Debentures.
“Despite the Company having previously repaid the debentures in accordance with their terms, in February 2011 the Debenture Holders filed a Notice of Civil Claim in the BC Supreme Court seeking an order that they had converted their debentures and possessed a 25% joint venture interest in MCoal’s Rosa Mine,” said Novadx about a mine it controls in Alabama. “In response to this litigation the Company brought an application to dismiss all of the claims of the holders Series A and Series B Debentures before the BC Supreme Court. On April 7, 2012, the BC Supreme Court issued a decision in favour of the Company and dismissed all of the claims of the holders of the Series A and Series B Debentures. The holders of the Series A and Series B Debentures have 30 days to appeal the decision, ending on May 7, 2012.”
The court website shows there was actually a May 7 decision on this fight with R.J. Tocher Holdings Ltd. and C.E. Tocher Holdings Ltd. Court records don’t show an April 7 ruling involving MCoal.
“The issue between the parties relates to whether R.J. Tocher and C.E. Tocher (collectively the ‘Tocher Companies’) exercised an election to convert the debentures issued to them by MCoal into an equity interest in a coal mining project, called the Rosa Coal Project, located in Alabama (the ‘Project’),” said the May 7 court decision. “The Tocher Companies contend that they exercised their conversion rights by election via an email message sent June 10, 2010, from their counsel, Mr. Greg Dureault, to an officer of MCoal, Mr. Neil MacDonald (the ‘Dureault email’). A collateral issue is whether the Court can determine the issue presented either by way of hearing of the petition, or by way of the summary trial procedure.”
In ruling against the Tocher Companies, the presiding judge wrote in part that an email isn’t a conversion document: “There is no question that the specific requirements for conversion by election, as set out in the debenture certificate, were not fulfilled. The terms set out in the debenture certificate required the debenture holder to present and surrender the debenture, together with a duly completed and executed ‘Notice of Conversion’ in the form set out in Schedule ‘A’ to the debenture certificate, to the borrower, at the address, etc., as specified. The date of the Notice of Conversion was important, as it set the conversion date. There was no surrender of the debenture certificate, and no Notice of Conversion as specified was delivered.”
Novadx added in the May 10 announcement that it has all of the necessary permits in place to complete the mining of all five increments under its phase 1 mine plan at the Rosa mine. The company is nearing the completion of mining the second increment, and will need to post additional reclamation bond fees and incur infrastructure costs, including road building and settlement pond construction costs, in order to commence mining on the next increments.
Notable is that in November 2011, the Alabama Surface Mining Commission approved a permit revision for the 573-acre Rosa auger mining operation in Blount County. The revision covered various relatively minor things, including the addition of seven incidental acres to an increment for a haulroad.
Novadx is a Vancouver-based mining investment company. Through MCoal, Novadx’s primary focus is to invest its capital to acquire and develop companies with active or near production high quality coal reserves in Appalachia.